EXHIBIT 4(a)
FIRST FEDERAL BANCORP, INC.
1997 PERFORMANCE STOCK OPTION PLAN
FOR SENIOR EXECUTIVE OFFICERS AND OUTSIDE DIRECTORS
1. Purpose of this Plan. The purpose of the First Federal Bancorp,
Inc., 1997 Performance Stock Option Plan for Senior Executive Officers and
Outside Directors is to provide incentive to the senior executive officers
and outside directors of First Federal Bancorp, Inc., and First Federal
Savings Bank of Eastern Ohio to maintain and improve the financial
performance of First Federal Bancorp, Inc. This Plan is intended to
authorize the grant of incentive stock options, as defined in Section 422 of
the Internal Revenue Code of 1986, as amended, and options which do not
qualify as incentive stock options under such code.
2. Definitions. As used in this Plan, the following terms have the
corresponding meanings:
(a) "Board" means the Board of Directors of First Federal
Bancorp, Inc. ("FFB"), or any successor corporation upon assumption of
this Plan.
(b) "Cause" means failure to comply with the Human Resources
Policies of FFB or First Federal Savings Bank of Eastern Ohio ("FFS")
or personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure or
refusal to perform the duties and responsibilities assigned to the
Optionee in any employment agreement to which the Optionee is a party,
willful violation of any law, rule, regulation or final cease-and
desist order (other than traffic violations or similar offenses),
conviction of a felony or for fraud or embezzlement, or material
breach of any provision of any employment agreement to which the
Optionee is a party.
(c) "Change of Control" means (i) the execution of an agreement
for the sale of all, or a material portion, of the assets of FFB or
FFS as would require a vote of shareholders under Ohio corporate law;
(ii) the execution of an agreement for a merger or recapitalization of
FFB or FFS or any merger or recapitalization whereby FFB is not the
surviving entity; (iii) a change of control of the FFB or FFS, as
defined or determined by the OTS; or (iv) the acquisition, directly or
indirectly, of the beneficial ownership (within the meaning of the
term "beneficial ownership" as defined under Section 13(d) of the
Exchange Act and the rules promulgated thereunder) of twenty-five
percent (25%) or more of the outstanding voting securities of FFB or
FFS by any person, trust, entity or group.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Stock Option Committee appointed by
the Board in accordance with Section 4(a) hereof.
(f) "Continuous Service" means the absence of any interruption
or termination of service to FFB or FFS by a Senior Executive Officer
or by an Outside Director. Service shall not be considered
interrupted in the case of sick leave, military leave or any other
leave of absence approved by the Board.
(g) "Effective Date" means the date on which this Plan is
adopted by the Board.
(h) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(i) "Fair Market Value" shall be determined as set forth in
Section 8(a) of this Plan.
(j) "FFB" means First Federal Bancorp, Inc., or any successor
corporation upon assumption of this Plan.
(k) "FFS" means First Federal Savings Bank of Eastern Ohio, the
wholly owned subsidiary of FFB.
(l) "ISO" means an incentive stock option, as defined in
Section 422 of the Code.
(m) "NQSO" means a stock option which does not qualify as an
incentive stock option, as defined in Section 422 of the Code.
(n) "OTS" means the Office of Thrift Supervision.
(o) "Option" means an ISO or NQSO granted in accordance with
the terms and subject to the conditions of this Plan.
(p) "Optionee" means a Senior Executive Officer or an Outside
Director who receives an Option pursuant to this Plan.
(q) "Outside Directors" means the five members of the Board who
are not employees of FFB or FFS and who are members of the Board on
the Effective Date.
(r) "Plan" means the First Federal Bancorp, Inc., 1997
Performance Stock Option Plan for Senior Executive Officers and
Outside Directors.
(s) "ROE" means the return on equity of FFB for a fiscal year
as calculated in accordance with generally accepted accounting
principles and as reported in the Annual Report to Shareholders for
such year.
(t) "Senior Executive Officers" means the President of FFB and
FFS and the three Senior Vice Presidents of FFS on the Effective Date.
(u) "Share" or "Shares" means one or more common shares, with
no par value, of FFB.
3. Shares Subject to this Plan.
(a) Shares Available. Subject to adjustment as provided in Section
3(b) of this Plan, the aggregate number of Shares with respect to which
Options may be granted pursuant to this Plan shall be 54,000. In the event
that (i) any Shares subject to an Option granted under this Plan, or as to
which such Option relates, are forfeited or (ii) an Option otherwise
terminates or is canceled without the delivery of Shares, the Shares covered
by such Option, or as to which such Option relates, shall become Shares with
respect to which Options may be granted to the extent permissible under Rule
16b-3 promulgated under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time. In the event that any
Option is exercised through the delivery of Shares, the number of Shares
available for Options under this Plan shall be increased by the number of
Shares surrendered, to the extent permissible under Rule 16b-3 promulgated
under the Exchange Act, or any successor rule or regulation thereto as in
effect from time to time.
(b) Adjustments and Corporate Acts. (i) In the event that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, exchange of Shares or other securities of FFB,
issuance of warrants or other rights to purchase Shares or other securities
of FFB, or other similar corporation transaction or event affects the Shares
in a manner by which an adjustment is necessary in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under this Plan, the Committee shall proportionately adjust any or
all (as necessary) of (I) the number of Shares or other securities of FFB
(or number and kind of other securities or property) with respect to which
Options may be granted; (II) the number of Shares or other securities of FFB
(or number and kind of other securities or property) subject to outstanding
Options; and (III) the grant or exercise price with respect to any Options;
provided, however, that no such adjustment shall be authorized to the extent
that such authority would cause this Plan to violate Section 422(b)(1) of
the Code, as from time to time amended, or Rule 16b-3 promulgated under the
Exchange Act, or any successor rule or regulation thereto as in effect from
time to time.
(ii) The existence of this Plan and the Options granted
hereunder shall not affect or restrict in any way the right or power
of the Board or the shareholders of FFB to make or authorize any
adjustment, recapitalization, reorganization or other change in FFB's
capital structure or its business, any merger, acquisition or
consolidation of FFB, any issuance of bonds, debentures, preferred or
prior preference stocks ahead of or affecting FFB's capital stock or
the rights thereof, the dissolution or liquidation of FFB or any sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, including any merger or acquisition which
would result in the exchange of cash, stock of another company or
options to purchase the stock of another company for any Option
outstanding at the time of such corporate transaction or which would
involve the termination of all Options outstanding at the time of such
corporate transaction.
4. Administration.
(a) Stock Option Committee. This Plan shall be administered by a
Stock Option Committee appointed by the Board. The Committee shall consist
of at least three members of the Board, one of whom shall be an employee of
FFS, and may consist of the entire Board.
(b) Powers of the Committee. The Committee is authorized to
interpret this Plan and to prescribe, amend and rescind rules and
regulations relating to this Plan; to determine the form and content of
Options to be issued under this Plan; and to make such other determinations
necessary or advisable for the administration of this Plan. The Committee
shall have and may exercise such other power and authority as may be
delegated to it by the Board from time to time. A majority of the entire
Committee shall constitute a quorum and the action of a majority of the
members present at any meeting at which a quorum is present shall be deemed
the action of the Committee. In no event may the Committee revoke
outstanding Options without the consent of the Optionee. The President of
FFB and such other officers as shall be designated by the Committee are
hereby authorized to execute instruments evidencing Options approved by the
Committee on behalf of FFB and to cause them to be delivered to the
Optionees. The construction and the interpretation of the provisions of
this Plan are vested with the Committee, in its absolute discretion. All
such decisions, determinations and interpretations shall be final,
conclusive and binding upon all parties having an interest in this Plan.
5. Eligibility. Eligibility to participate in this Plan shall be
limited to the Senior Executive Officers and to the Outside Directors.
6. Term of Plan. This Plan shall continue in effect for a term of
five (5) years from the Effective Date, unless earlier terminated pursuant
to Section 13 hereof. Unless otherwise expressly provided in this Plan or
in an applicable award agreement, the authority of the Board or the
Committee to amend, alter, adjust, suspend, discontinue or terminate any
such award or to waive any conditions or rights under any such award shall
continue after the expiration of such term.
7. Grant of Options.
(a) Automatic Performance Grant. In the event that the ROE for any
one of the fiscal years ended September 30, 1997, 1998, 1999, 2000 or 2001,
equals or exceeds the average ROE for the five fiscal years preceding any
such fiscal year, each one of the Senior Executive Officers and each one of
the Outside Directors shall automatically be granted on the immediately
following December 1 an Option to purchase 2,000 Shares; provided, however,
that the maximum aggregate number of Shares subject to Options granted to
any one Senior Executive Officer or any one Outside Director under this Plan
shall not exceed 6,000.
(b) Option Agreement. Each Option granted pursuant to this Plan
shall be evidenced by an instrument in a form approved by the Committee.
Such instrument shall contain terms and conditions which are consistent with
this Plan. Any option granted to a Senior Executive Officer shall be an
ISO. Any option granted to an Outside Director shall be a NQSO.
8. Terms and Conditions of Options. Each and every Option granted
pursuant to this Plan shall comply with, and be subject to, the following
terms and conditions:
(a) Option Price. (i) The price per Share at which each Option
granted under this Plan may be exercised shall be the Fair Market
Value of the Shares on the date such Option is granted, except as set
forth in subsection (ii) of this Section 8(a). The Fair Market Value
shall equal the mean between the closing high bid and low asked
quotations with respect to a Share on such date on The Nasdaq Stock
Market.
(ii) The foregoing notwithstanding, in the event an
Optionee owns Shares representing more than ten percent (10%) of
the outstanding Shares at the time the Option is granted, the
Option exercise price shall not be less than one hundred and ten
percent (110%) of the Fair Market Value of the Shares at the
time the Option is granted.
(b) Method of Exercise. An Option may be exercised, in whole
or in part, by giving written notice of exercise to FFB. Such notice
shall specify the number of Shares to be purchased. Full payment for
each Share purchased upon the exercise of any Option granted under
this Plan shall be made at the time of exercise of each such Option
and shall be paid in cash or cash equivalents, including personal
checks, or, if permitted by the Committee, in Shares or a combination
of cash or cash equivalents and Shares. Shares utilized in full or
partial payment of the exercise price shall be valued at the Fair
Market Value at the date of exercise. FFB shall accept full or
partial payment in Shares only to the extent permitted by applicable
law. No Shares shall be issued until full payment therefor has been
received by FFB. No Optionee shall have any of the rights of a
shareholder of FFB until Shares are issued to such Optionee.
(c) Term of Option. Subject to the right of FFB to provide for
earlier termination in the event of any merger, acquisition or
consolidation involving FFB, the term of each Option granted pursuant
to this Plan shall be ten (10) years from the date each such Option is
granted; provided, however, that in the case of a Senior Executive
Officer who owns a number of Shares representing more than ten percent
(10%) of the Shares outstanding at the time the Option is granted, the
term of the Option shall be five (5) years.
(d) Exercise Generally. Any Option granted pursuant to this
Plan shall, unless otherwise specified by the Committee at the time of
grant, be exercisable immediately after the date of grant of such
Option; provided, however, that except as otherwise provided in
Section 9 hereof, no Option may be exercised unless the Optionee shall
have been a Senior Executive Officer or an Outside Director of FFB or
FFS at all times during the period beginning with the date of grant of
any such Option and ending on the date which is three (3) months
before the date of exercise of any such Option. The Committee may
impose additional conditions upon the right of an Optionee to exercise
any Option granted hereunder as long as such conditions are not
inconsistent with the terms of this Plan.
(e) Transferability. Any Option granted pursuant to this Plan
shall be exercised during any Optionee's lifetime only by the Optionee
to whom such option is granted and shall not be assignable or
transferable other than by will or by the laws of descent and
distribution.
(f) Limit on Grant. In no event shall an Optionee be granted
Options to purchase Shares in excess of twenty-five percent (25%) of
the aggregate Shares subject to this Plan as described in Section 3
hereof.
(g) Change of Control. Notwithstanding any provision set forth
in the instruments pursuant to which individual Options are granted,
all outstanding Options shall become immediately exercisable in the
event of a Change of Control.
9. Effect of Termination of Continuous Employment, Disability or
Death on Options.
(a) Termination of Continuous Employment. In the event that any
Optionee's Continuous Service to FFB or FFS shall terminate for any reason,
other than permanent and total disability (as such term is defined in
Section 22(e)(3) of the Code, as from time to time amended), death or
termination for Cause, all of any such Optionee's Options and all of any
such Optionee's rights to purchase or receive Shares pursuant thereto shall
automatically terminate on the earlier of (i) the respective expiration
dates of any such Options or (ii) the date which is three (3) months after
the date of such termination of Continuous Service.
(b) Disability. In the event that any Optionee's Continuous Service
to FFB or FFS shall terminate as the result of the permanent and total
disability (as such term is defined in Section 22(e)(3) of the Code, as from
time to time amended) of such Optionee and the Optionee was entitled to
exercise Options at the date of such termination of Continuous Service, such
Optionee may exercise any Options granted to him pursuant to this Plan at
any time prior to the earlier of (i) the respective expiration dates of any
such Options or (ii) the expiration of one (1) year after the date of such
termination of Continuous Service.
(c) Death. In the event of the death of any Optionee on a date on
which the Optionee was entitled to exercise any such Options, any Options
granted to any such Optionee may be exercised by the person or persons to
whom the Optionee's rights under any such Options pass by will or by the
laws of descent and distribution (including the Optionee's estate during the
period of administration) at any time prior to the earlier of (i) the
respective expiration dates of any such Options or (ii) the expiration of
six (6) months after the date of death of such Optionee (or such later
period not to exceed one (1) year which the Committee may permit, in its
discretion).
(d) Termination for Cause. In the event an Optionee's service to FFB
or FFS is terminated for Cause, any Options granted to such Optionee which
are outstanding on the date of termination shall be forfeited.
(e) Termination of Options. To the extent that any Option granted
under this Plan to any Optionee whose Continuous Service to FFB or FFS
terminates shall not have been exercised within the applicable period set
forth in this Section 9, any such Option, and all rights to purchase or
receive Shares pursuant thereto, shall terminate on the last date of the
applicable period.
10. Time of Granting Options. The date of grant of an Option under
this Plan shall be the applicable date under Section 7 of this Plan. Notice
of the grant shall be given to each Optionee to whom an Option is so granted
within a reasonable time after the date of such grant.
11. Effective Date. The Effective Date of this Plan shall be the
date on which this Plan is adopted by the Board.
12. Approval by Shareholders. This Plan shall be approved by the
shareholders of FFB within twelve (12) months before or after the Effective
Date.
13. Amendment and Termination of this Plan.
(a) Amendment and Termination of this Plan by the Board. The Board
may alter, suspend or discontinue this Plan, except that no action of the
Board may increase (other than as provided in Section 3(b) hereof) the
maximum number of Shares subject to Options granted under this Plan,
materially increase the benefits accruing to Optionees under this Plan or
materially modify the requirements for eligibility for participation in this
Plan, unless such action of the Board shall be approved or ratified by the
shareholders of FFB.
(b) Change in Applicable Law. Notwithstanding any other provision
contained in this Plan, in the event of a change in any federal or state
law, rule or regulation which would make the exercise of all or part of any
previously granted Option unlawful or subject FFB to any penalty, the
Committee may restrict any such exercise without the consent of the Optionee
or other holder thereof in order to comply with any such law, rule or
regulation or to avoid any such penalty.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
with respect to any Option granted under this Plan unless the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, any applicable state
securities law and the requirements of any stock exchange or quotation
system upon which the Shares may then be listed or quoted. As a condition
to the exercise of an Option, FFB may require the person exercising the
Option to make such representations and warranties as may be necessary to
assure the availability of an exemption from the registration requirements
of federal and state securities law.
15. Reservation of Shares. During the term of this Plan, FFB will
reserve and keep available a number of Shares sufficient to satisfy the
requirements of this Plan.
16. Unsecured Obligation. No Optionee under this Plan shall have any
interest in any fund or special asset of FFB by reason of this Plan or the
grant of any Option to such Optionee under this Plan. No trust fund shall
be created in connection with this Plan or any grant of any Option
hereunder, and there shall be no required funding of amounts which may
become payable to any Optionee.
17. Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the State of Ohio, except to the extent that
federal law shall be deemed to apply.
18. Compliance with Rule 16b-3. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 promulgated thereunder
or any successor rule or regulation thereto as in effect from time to time.
To the extent any provision of this Plan or action by the Committee fails to
so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.
19. Tax Withholding. FFB shall have the right to deduct from any
settlement, including the delivery or vesting of Shares, made under this
Plan any federal, state or local taxes of any kind required by law to be
withheld with respect to such payments or to take such other action as may
be necessary in the opinion of FFB to satisfy all obligations for the
payment of such taxes. If Shares are used to satisfy tax withholding, such
Shares shall be valued based on the Fair Market Value when the tax
withholding is required.
20. No Right to Employment. Neither the adoption of this Plan nor
the granting of any Option shall confer upon any employee of FFB or FFS any
right to continued employment with FFB or FFS, as the case may be, nor shall
it interfere in any way with the right of FFB or FFS to terminate the
employment of any of its employees at any time, with or without cause.